Ukraine trial restarts on eve of EU summit

German Chancellor Angela Merkel upped the ante in a telephone call to Yanukovych on 14 September in which she reportedly said the EU will not ratify a strategic trade and association pact with Ukraine unless Tymoshenko and other political rivals, such as former interior minister Yuri Lutsenko, are freed to take part in upcoming elections.

Tymoshenko loyalist and former deputy prime minister Hryhoriy Nemyria told EUobserver on Tuesday the best result would be if Yanukovych frees her before the Warsaw event.

"There are wide expectations that today or in the next few days there will be some developments in order to create a good atmosphere for the summit. But it remains to be seen," he said.

"Nobody believes the government mantra that Ukrainian courts are independent and that the president cannot intervene. The fact that he already delayed the process by two weeks is proof that he can intervene," he added.

The trial has an economic dimension as well as a political one.

If courts find Tymoshenko guilty of illegally signing a gas contract with Russia in 2009 it will help Ukraine to push for lower prices, set to hit $400 per thousand cubic metres this winter, the same level as for the much more wealthy Germany.

One EU diplomat said the contract could bankrupt Ukrainian state gas firm Naftogaz, allowing Russia to take over its transit pipelines and undermine Ukraine's economic independence.

"They are in a very vulnerable position. The Nord Stream pipeline means Russia can already reduce transit volumes. If South Stream is built, then pretty soon there will be nothing left in Ukraine except grass. It will become a non-country," the contact said, referring to Russian pipeline projects bypassing Ukraine.

Ukraine currently transits 80 percent of Russian gas exports to the EU, with Nemyria warning there could be a repeat of the 2009 gas war which caused electricity blackouts in some eastern EU capitals.

"Naftogaz could run out of money ... The situation is serious and I am sure the Early Warning Mechanism [an EU-Russia gas alert protocol] has already been triggered," he said.

For his part, Alex Morozov, an economist at HSBC bank in Moscow, said the Ukraine-Russia gas tussle is a political game but for lower stakes.

He told this website that Ukraine is in a good position to see out the winter because it stocked up on cheap gas in the first half of this year and because the National Bank of Ukraine is sitting on some $58 billion of foreign currency reserves.

"I do not think it is the case ... a new gas war is highly unlikely," he said.

Morozov added that if Yanukovych does not manage to get lower prices from Russia, he will be forced to increase household and industrial bills at a time when his party's popularity is already waning, however.

"He is trying to avoid price hikes for political reasons, not because he cannot afford to pay," the economist said.